Lynnwood Company and Owner Sentenced for Trafficking in Counterfeit Goods
Companies Sold Counterfeit Cisco Systems Equipment Made in China

U.S. Attorney’s Office
July 11, 2014

Western District of Washington(206) 553-7970

CONNECTZONE.COM, LLC, a Lynnwood, Washington electronics company, and its owner, DANIEL OBERHOLTZER, were sentenced today in U.S. District Court in Seattle for conspiracy to traffic in counterfeit goods, announced U.S. Attorney Jenny A. Durkan. Company owner DANIEL OBERHOLTZER was sentenced to 37 months in prison, a $20,000.00 fine and three years of supervised release. He was also ordered to forfeit $716,778.55 in proceeds from the sales of counterfeit goods. The company was sentenced to five years organizational probation and also ordered to forfeit $716,778.55 in proceeds from the crime.

According to the evidence introduced as part of the case, CONNECTZONE.COM, LLC operated websites that advertised and sold computer networking products. These included products bearing trademarks owned by U.S. company Cisco; but the investigation revealed that CONNECTZONE.COM, LLC instead obtained its products from multiple foreign suppliers of counterfeit goods including a Chinese firm, SHENZHEN XIEWEI ELECTRONIC, LTD, headquartered in Shanghai, and its representative, MAO MANG, aka “BOB MAO.”

At sentencing, the Honorable Richard A. Jones commented that OBERHOLTZER’s crimes were aggravated by the fact that because of the quality problems with the counterfeit goods, OBERHOLTZER “had no idea what might happen when the counterfeit Cisco products he sold failed.” Judge Jones also noted that the sentence of 37 months should “send a message to anyone else thinking about being involved in counterfeit goods.”

“Innovation and our economy demand that the intellectual property of businesses be protected,” said U.S. Attorney Durkan. “Here, the defendants used the hard earned brands of others and slapped it on inferior products.”

“Counterfeiting high dollar goods can be very lucrative for enterprising criminals,” said Brad Bench, special agent in charge of HSI Seattle. “Their illicit activities ultimately come at the expense of trademark owners and consumers. They don’t contribute to research and development and the knockoffs they sell generally don’t match the quality and safety of genuine items.”

In total, four individuals and two companies were charged in the Indictment returned in January 2013, including SHENZHEN XIEWEI ELECTRONIC, LTD, and BOB MAO . Defendant EDWARD VALES was sentenced on June 13, 2014, to two years of probation and five months of home confinement for one count of Mail Fraud. Defendant LANCE WILDER was convicted of conspiracy to traffic in counterfeit goods, two counts of mail fraud and four counts of trafficking in counterfeit goods following a jury trial on April 7, 2014. Mr. WILDER is scheduled to be sentenced before The Honorable Richard A. Jones on July 25, 2014.

The evidence admitted at trial established that as early as 1997, while the company was operating under a different name, Electro Products, Incorporated, it was distributing counterfeit equipment manufactured in China. DANIEL OBERHOLTZER, LANCE WILDER and EDWARD VALES would advise BOB MAO and XIEWEI ELECTRONICS and other Chinese companies regarding how to manufacture products that would look like genuine Cisco trademarked goods. Some of the goods would be labeled “samples” when shipped to the U.S. to try to deceive U.S. Customs officials. The U.S.-based conspirators falsely advertised the counterfeit goods as genuine and offered it for sale at a much lower price than genuine Cisco equipment. The evidence included numerous e-mails sent between the conspirators as they ran their scheme including e-mails describing a plan for “Operation Cisco” in which the defendants laid out their plan to obtain counterfeit Cisco products.

This case was investigated by the Seattle-Tacoma Border Enforcement Security Task Force (BEST), led by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and comprised of officers and investigators from U.S. Customs and Border Protection’s Office of Field Operations; the U.S. Secret Service; the U.S. Coast Guard Investigative Service; the FBI; the U.S. Postal Inspection Service; the Seattle Police Department and the Port of Seattle Police Department. BEST Seattle investigates smuggling and related crimes and combats criminal organizations seeking to exploit vulnerabilities at the Seattle and Tacoma seaports and adjacent waterways.

The case is being prosecuted by Assistant United States Attorneys Norman Barbosa and Justin Arnold.